Nat-Gas Prices Jump as US Weather Forecasts Turn Hotter

October Nymex natural gas (NGV26) on Tuesday closed up +0.129 (+4.55%).

Nat-gas prices recovered from a 1-week low on Tuesday and settled sharply higher on forecasts for hot US autumn weather, potentially boosting nat-gas demand from electricity providers to power increased air conditioning use.  The Commodity Weather Group said Tuesday that forecasts shifted to hotter, with above-average temperatures expected in the South-Central US through October 6.

US (lower-48) dry gas production on Tuesday was 112.2 bcf/day (+3.1% y/y), according to BNEF.  Lower-48 state gas demand on Tuesday was 74.6 bcf/day (+0.3% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Tuesday were 18.5 bcf/day (-0.6% w/w), according to BNEF.

A bearish medium-term factor for nat-gas prices is the market's expectation that a “Super El Niño” will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand for nat-gas. 

As a positive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended September 12 rose +16.1% y/y to 94,427 GWh (gigawatt hours).  Also, US electricity output in the 52 weeks ending September 12 rose +3.3% y/y to 4,405,549 GWh.

As a bearish factor, the US Energy Information Administration (EIA) on August 11 projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average.  Last Monday, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.

Last Thursday's weekly EIA report was bullish for nat-gas prices, as it showed a +44 bcf increase in US nat-gas inventories for the week ended September 11, below expectations of +48 and below the 5-year weekly average of +74 bcf.  As of September 11, nat-gas inventories were down -3.9% y/y and +3.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 20, gas storage in Europe was 70% full, compared to the 5-year seasonal average of 86% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ended September 18 rose by +2 to match the 3-year high of 134 rigs first set in February 2026.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.